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Regulatory approval for the multi-billion euro UPS and TNT Express merger is dependent on whether the new company would be challenged enough by its competitors, the European Commission has said.

If the deal is approved, the number of major parcel delivery companies in Europe will be reduced from four to three, which the regulator is concerned will reduce the amount of competitive service customers will have access to.

Joaquín Almunia, vice president of the European Commission, responsible for competition policy, said in a speech:  “An important issue in our analysis is whether the company that resulted from the merger would be challenged enough by the other two competitors; DHL and FedEx.”

The speech, which Almunia made at the European Competition Day in Cyprus on Tuesday (2 October), saw the regulator express concerns that the  merger would impact the European economy.

“These companies offer a service that has a broad impact on our economy, especially for cross-border trade, so it is important that customers continue to have access to these services at competitive conditions,” Almunia said.

UPS and TNT Express announced the €5.16bn takeover bid in March. The regulator temporarily suspended its decision in August as it needed more time to gather evidence.  The companies now expect the deal to be completed in early 2013.

Last month TNT Express chief executive Marie-Christine Lombard resigned to pursue another career. Chief financial officer Bernard Bot took over as interim CEO at the end of September.